CSA finds corporate climate change risk reports failing to satisfy investors

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CALGARY, A.B. — A year-long review of climate change risk reporting by large Canadian publicly traded companies has found huge disparities in practices between corporations and industries but recommends no immediate action.

Further work is planned to develop new guidelines and potentially new rules to help companies comply with disclosure rules, according to a report from the Canadian Securities Administrators, a national body representing provincial securities regulators, released Thursday.

Climate change disclosure is a hot topic among investors, the CSA says, adding users it consulted say companies need to improve how they report climate change risks and financial impacts, with many complaining that current disclosures either don’t exist or are “boilerplate,” vague or incomplete.

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“We now have a better understanding of the current state of climate change-related disclosure in Canada,” said CSA chair Louis Morisset.

“Moving forward, we will aim to improve the disclosure of risks and related governance and oversight processes, while recognizing both investors’ and issuers’ perspectives.”

Shareholder-sponsored motions related to climate change risk reporting are being put forward for investor votes at upcoming annual general meetings of Imperial Oil Ltd., which is urging rejection of a motion, and pipeline company TransCanada Corp., which recommends acceptance.

It is “disturbing” that the CSA found such widespread dissatisfaction with the current level of disclosure, said Frank Allen, executive director of the Canadian Foundation For Advancement of Shareholder Rights.

“(It) underscores the pressing need for guidance and education of issuers on climate change-related risks, which are likely to become increasingly more important and relevant information for investors and shareholders,” he said in a statement.

Security regulators in Canada are being “far too timid,” said Keith Stewart, Greenpeace Canada’s senior energy strategist.

“Given the disproportionate exposure of Canada’s resource-based economy to climate risks and opportunities, our governments should require companies to meet or exceed the standards recommended by the global Task Force on Climate-related Financial Disclosure,” he said.


The task force is an international body founded by former New York mayor Michael Bloomberg that is calling for voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear and efficient.

The CSA found that the oil and gas industry was the only one in which the majority of respondents in a survey said they currently disclose climate change risk information. But it also found room for improvement, noting that oil and gas issuers who disclose their greenhouse gas emissions use multiple calculation methods without consistent standards.

The CSA found that 56 per cent of the Canadian issuers it examined provided specific climate change-related disclosure in documents required by regulation, with the remaining issuers either providing boilerplate or no disclosure.

It says about 85 per cent of issuers provided climate change-related disclosure in their voluntary reports.

The climate change-related risk most identified by issuers was from regulation, identified by 90 per cent of companies in their disclosures and 64 per cent in the issuer survey.


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